Home / Industry / Are e-wallets beginning to worry banks?

New Delhi: In the last week of October, Paytm founder Vijay Shekhar Sharma received a message from State Bank of India (SBI). It wasn’t good news. The message said the nation’s largest lender and its associate banks would no longer allow their customers to load money from their accounts onto the Paytm wallet.

“The reason that was given to us when we wrote back was that the net banking service was for shopping, not for uploading wallets," said Sharma.

Paytm, run by One97 Communications Ltd, claims to have 100 million wallet users, who carry out more than 60 million transactions per month. Investors in the company include the Alibaba Group and its affiliate Ant Financial Services, SAIF Partners, Sapphire Venture and Silicon Valley Bank.

SBI’s affiliates include State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. SBI did not respond to emails, text messages and phone calls seeking comment.

Users of the Oxigen wallet aren’t allowed by the payment gateways of SBI and Citibank NA to load their wallets, said Ankur Saxena, chief executive of Oxigen Wallet, offered by Oxigen Services India Pvt. Ltd. Occasionally, they encounter problems in loading money using SBI Maestro cards, too, he added.

From time to time, ICICI Bank Ltd’s net banking service prevents Oxigen’s wallets from being loaded on suspicion of fraud and does so after being reassured by Oxigen that the transaction is genuine, Saxena said. “As a responsible bank, we take various risk-mitigating measures to protect interests of our customers, largely in consultation with wallet owners. These may include temporarily stopping funding to certain wallets in extreme cases to prevent fraudulent transfer of funds through these wallets," ICICI Bank said in an emailed response.

Are banks, which have launched their own wallets, getting worried about the rise of independent wallet companies facilitating online payments and cash transfers? SBI has its own wallet service, called Buddy. ICICI Bank (Pocket) and HDFC Bank Ltd (PayZapp) too have their own wallets.

Technology-savvy mobile wallet companies have enabled smartphone users to access their current and savings bank accounts (called CASA in banking lingo) for online payments and money transfers, according to Bindu Ananth, chair, IFMR Trust. She was speaking at a Mint Cash to Digital summit on 6 November.

Electronic wallets are becoming increasingly popular in India, riding on the back of the growth of e-commerce (most Indians are still chary of using plastic online, and wallets are definitely more convenient than paying cash on delivery). There is no estimate available on the number of transactions that happen through such wallets every day and the value. A report by RNCOS, a research firm, estimates that the business of wallets itself (not the business done through wallets) at 350 crore currently. That is expected to more than triple to 1,210 crore in 2019, the researcher said.

So-called third-party wallets (those not offered by banks or credit card companies) do better, says an expert.

“Globally, independent third-party mobile wallets have done better compared with wallets offered by banks because for the former, that is a focus business area," said Ravi Trivedy, a consultant and former partner with consulting firm KPMG.

Interestingly, soon after independent wallet companies started operations in India and gained prominence, many banks launched their own wallets. In fact, SBI even plans to launch a wallet for feature phone users by next month called Batua, as reported by The Economic Times on 12 November.

Trivedy says wallets could redefine banking and payments the way automated teller machines (ATMs) did. “Before anyone realized, the early movers (in ATMs) became too big," he said.

Still, he is not convinced that banks are trying to stifle the growth of wallets “by design", although he admits that it is only natural that banks be reluctant to allow their digital infrastructure to be used.

Indeed, Satyen Kothari, co-founder, Citrus Pay, and Bipin Preet Singh, co-founder and chief executive officer, MobiKwik Systems Pvt. Ltd, say that their wallet services have not faced any problems of banks preventing cash uploads.

Banks would rather want to have their own wallets or form partnerships with payments bank, said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services Llp.

“They would want to partner payments bank rather than anyone else as there is revenue sharing," he added. SBI has partnered Reliance Industries Ltd, which has got a payments bank licence. Interestingly, Sharma of Paytm, in his individual capacity, has also been awarded a payments bank licence by the Reserve Bank of India.

If banks do not want these third-party wallets to leverage their infrastructure, rather than not allowing them to use their channel, they may discourage the usage through other means—such as levying a charge, said Parekh.

On Friday, joining the ever-growing list of third-party wallet providers, cab-hailing service Ola announced that it is entering the mobile payments space with the launch of its dedicated mobile app called Ola Money, a move that will put Ola in direct competition with Alipay-backed Paytm and Snapdeal-owned Freecharge, as reported by Mint (

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